China Trade Balance May 2018

China: Export growth steadies in May

June 9, 2018

Export growth was stable in May, expanding 12.6% over the previous year and matching April’s revised print (previously reported: +12.9% year-on-year). The figure was above market expectations of an 11.1% increase.

Import growth, meanwhile, soared to 26.0% annually in May, up from 21.5% in April. Moreover, the print beat market analysts’ forecasts of a softer 18.0% rise.

Because of the acceleration in import growth, the trade surplus came in at USD 24.9 billion in May, down from USD 39.8 billion the same month a year prior (April 2018: USD 28.4 billion). The 12-month moving sum of the trade surplus declined to USD 384 billion in May from a revised USD 399 billion in April (previously reported: USD 401 billion), the lowest figure in over three years.

The trade surplus is narrowing amid ongoing trade tensions with the U.S. Moreover, imports are buttressed by strong domestic demand and higher commodity prices. Looking ahead, higher import tariffs in the United States, and China’s intention to open its markets further and increase imports voluntarily through reducing and lowering tariffs could add further pressure to the trade balance.

FocusEconomics panelists expect exports to expand 7.4% in 2018 and imports to rise 10.6%, bringing the trade surplus to USD 392 billion. In 2019, exports are expected to increase 5.2% and imports to increase 6.8%, with a trade surplus of USD 380.0 billion.

Author:Lindsey Ice, Economist

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China Trade Balance Chart

Note: 12-month sum of trade balance in USD billion and annual variation of the 12-month sum of exports and imports in %.Source: General Administration of Customs of the People’s Republic of China and FocusEconomics calculations.

The manufacturing Purchasing Managers’ Index (PMI) published by the National Bureau of Statistics (NBS) and the China Federation of Logistics and Purchasing (CFLP) decreased to 49.5% in August from July’s 49.7%.

While initially threatening to slap a 10% tariff on the remaining USD 300 billion of imports from China, U.S. President Donald Trump partially backed down in mid-August by postponing imposing tariffs on a list of consumer goods from 1 September to 15 December.

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